Hedge funds find salvation in Japan’s Abenomics

Financial Times – If hedge fund managers believed in salvation, then Japanese prime minister Shinzo Abe would be a prime candidate for saviour.
For a $2.4tn industry whose returns for the past four years have been disappointing at best, and moribund at worst, only one trade has really mattered of late: buying Japan.

The soaring Nikkei and plummeting yen – triggered by Mr Abe’s move to precipitate a dramatic change in policy at the Bank of Japan towards greater quantitative easing – have powered some of the biggest returns in years for hedge funds.

The Nikkei 225 has rallied 32 per cent so far this year, while the yen has fallen 11.4 per cent against the dollar.

“You have big managers talking about the opportunities in Japan a lot more than they have done for as long as I can remember,” says Christy York, EMEA head of capital introduction at Citi.

“We have had a few false dawns in Japan before and they have run out of steam. This time there does seem to be more of a consensus that this is the real thing. There is more optimism that this is a long-term structural transition.”